Alarmed Industry Reacts to a Threat : Home Security Companies Win Washington Battle

In the pitched battle to shape the telecommunications legislation now working its way through Congress, phone companies, cable operators and other wealthy and influential corporate giants would seem the most formidable warriors.

Yet with little fanfare, and even less money, the nation’s 13,000 burglar alarm operators have managed to get a provision in major bills pending before the House and Senate that would block the seven regional Bell telephone companies from entering a part of their $10 billion-a-year business for 5 1/2 years.

Some political insiders say the burglar alarm industry has triumphed because the Baby Bells--which have achieved fearsome political clout by spending as much as $40 million in a single year on lobbying--are more concerned with gaining entry to the much bigger cable TV and long-distance telephone markets.

But as Congress moves next month to put the final touches on legislation aimed at opening up the nation’s $300-billion telecommunications industry to more competition, many Capitol Hill veterans say they are impressed by the accomplishment of a ragtag group of small-business people that a year ago was hardly known in Washington.

“The alarm industry has been very effective in their ability to get their issues raised,” said Ronald W. Stowe, vice president of Pacific Bell’s Washington operations. “They were successful because they advocated their own particular interests and did not try to upset the essence of the overall legislative package. They are proof that you don’t have to be big or rich to be effective in Washington.”

Added Albert J. McGann, a Washington lobbyist who is battling the Baby Bells on behalf of 500 small long-distance carriers who want to keep the local phone companies out of their business, “the alarm industry got what they wanted (because) they were willing to get down in the trenches and fight.”

Ordinarily, restricted competition is bad news for consumers. But experts say the alarm industry is already highly competitive and that the temporary ban on Baby Bell participation will allow time for the Bells to face more competition on their own turf. More local phone competition should lower the price consumers pay to get ongoing telephone line monitoring of their alarm systems.

A bill containing the alarm industry’s measure is expected to be approved by the House before summer. A similar provision, backed by Sens. Ernest F. Hollings (D-S.C.), Daniel K. Inouye (D-Hawaii) and John C. Danforth (R-Mo.), is pending in the Senate Commerce Committee.

The victory sets the stage for the little-known burglar alarm industry to take its place among the galaxy of new technologies jockeying for consumer markets in the Information Age. With concern about crime running high, commercial and residential electronic security systems--whose monitoring devices can now accurately distinguish between a human intruder and a scurrying pet--are expected to become a key part of any broad future data networks.

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While local and long-distance telephone companies have been laying off workers, the security industry is forecast to add jobs at more than double the rate of all other occupations during the next decade, according to the Bureau of Labor Statistics. Already there are more installed burglar alarm systems (an estimated 18 1/2 million) than cellular telephone subscribers (16 million).

“Home security systems have really come a long way; America is leading in this technology,” said Gary L. Parr, editor of Security Distributing & Marketing, a Des Plains, Ill.-based trade magazine.

Noting that many systems have the electronic sophistication of small computers, Parr said alarms are increasingly being bundled with home automation features so users can remotely manipulate their home’s climate control and entertainment systems as well as surveillance functions.

The industry’s promise had attracted the attention of phone companies, whose wires enter 94% of all American homes and businesses. Most security firms rely on local phone connections to monitor alarms placed in homes and businesses. They feared the Baby Bells would take their customers and underprice them by cross-subsidizing alarm service with other telephone revenue.

But under a measure proposed by House Commerce Committee Chairman John D. Dingell (D-Mich.), the Baby Bells would be barred for 5 1/2 years from the most lucrative part of the business: offering alarm monitoring services for a monthly fee. Even after the ban expired, the Bells would still need individual approval from both the Justice Department and the Federal Communications Commission to offer monitoring services. A Senate bill contains a similar provision.

Staking a claim to the brave new world of information technology seemed inconceivable for an industry that only two years ago was being buffeted by cutthroat competition, clashes with police departments over false alarms and news reports that some burglar alarm installers were using scare tactics to win business.

But alarm installers quickly coalesced around the issue of protecting their industry from the Baby Bells.

“When I first got involved with these people, virtually nobody knew their congressman,” said Bill Signer, a lobbyist for the National Burglar & Fire Alarm Assn. in Bethesda, Md. “They didn’t understand the basic political process. But one thing they did know was how to make sales.”

Burglar alarm installers used that skill to sell their legislative ideas on Capitol Hill.

“There was a lot of preparation,” said Stan Martin, former executive director of the burglar alarm association.

“We sent tens of thousands of letters, and every month dealers would call their representative in Congress. We had two legislative blitzes where we had dealers from each state visit” the Hill, added Martin, who is now a vice president at ADI, a Syosset, N.Y.-based alarm manufacturer. “There is nothing more effective than having a small-business owner show up and tell a congressman that ‘my job is at stake.’ ”

Among the foot soldiers in the hard-sell campaign was David Holmes, who owns a two-man burglar alarm outlet in Kirkland, Wash.

Holmes, who had never before visited the nation’s capital, came to Washington, D.C., twice in the past year to buttonhole lawmakers on behalf of his fellow burglar alarm installers in Idaho and Washington state. He even met with Heather S. Foley, wife of House Speaker Thomas S. Foley (D-Wash.).

“I was not politically involved beforehand, but when I see an industry is going downhill because of unfair competition, I try to do something to make a change,” Holmes said.

Holmes said he was surprised by how well the political process worked for the alarm industry, adding, “It restored my faith in the system.”

Increasing Alarm

Reflecting increased fear of crime, Americans are buying and installing more home alarm systems. Alarm systems in use, in millions: 1994, 18.53 (projection)

Source: J.P. Freeman & Co.